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Bank Of Baroda
BSE: 532134|NSE: BANKBARODA|ISIN: INE028A01013|SECTOR: Banks - Public Sector
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Chairman's Speech (Bank Of Baroda) Year : Mar '13
Dear Stakeholder,
 
 I am pleased to report that during the year 2012-13 (FY13), Bank of
 Baroda not only displayed its resilience to extreme challenges and
 volatilities in the Indian economy, but also attained the leadership
 spot in the nationalised banking segment in terms of overall business
 level.
 
 It is appropriate at the outset to review the business environment
 within which your Bank operated during the year under review.
 
 Economic Review
 
 During FY13, the Indian economy witnessed the slowest growth in a
 decade combined with elevated inflation. The real GDP growth more than
 halved from 9.2% in Q4, FY11 to 4.5% in Q3, FY13 - the lowest in 15
 quarters. The sharp slowdown in industry and services reflected several
 factors including domestic policy uncertainties, lagged impact of
 earlier monetary tightening and slackening of external demand. The
 moderation in agriculture growth accentuated the growth prospects as
 well as inflationary expectations.  Though headline inflation
 (WPI-based) started moderating in H2, FY13, from a range of 7.5-8.1% in
 first half of FY13 to 5.96% in March 2013, the retail (CPI-based)
 inflation remained sticky at the double-digit level led by elevated
 food inflation. Despite the deteriorating growth scenario, the RBI
 cautiously managed the growth-inflation dynamics by reducing the Repo
 Rate and SLR by 100 basis points each and CRR by 75 basis points,
 albeit in a gradual fashion.
 
 Apart from the slowing growth, the India economy witnessed serious
 external sector imbalance with current account deficit (CAD) touching
 an all time high of 6.7% in Q3 FY13 on account of growing trade deficit
 primarily led by subdued exports growth and high oil & gold imports.
 Notwithstanding the high level of CAD, the rupee-dollar exchange rate
 remained range bound due to the healthy portfolio and ECB inflows.
 
 Given the all round weakness in the economy, the deposit and credit
 growth of scheduled commercial banks (SCBs) remained lackluster
 throughout the year. Given the high level of retail inflation rate, the
 SCBs had to offer high deposit rates so as to protect their deposit
 base against a backdrop of attractive gold and other investments.
 Despite this, the deposit growth lagged behind the credit growth by 250
 to 300 bps throughout the year. Additionally, the banks faced
 heightened asset quality concerns as the corporate sector faced
 investment slowdown and stalled projects, while the government sector
 compressed its expenditure to achieve fiscal consolidation.
 
 Bank of Baroda: Resilience through Difficult Times
 
 Despite such adverse macro backdrop, your Bank added further strength
 to its business during FY13 and emerged as the largest nationalized
 bank in terms of global business in the Indian banking space. The
 Global Business of your Bank increased by 19.3% (y-o-y) to Rs 8,02,069
 crore from Rs 6,72,248 crore between end-March 2012 and end-March 2013.
 
 Moreover, it managed to garner its aggregate deposits at an above
 industry average rate of 23.1%, notwithstanding the alternative
 attractive investment opportunities in the form of physical assets. Its
 Global CASA (Low-cost) Deposits grew by 15.9% (y-o-y) to Rs 1,19,981
 crore in FY13 with the Share of Domestic CASA staying at 30.4%.
 
 Your Bank''s Total Income registered a decent growth of 17.3% (y-o-y)
 and reached the level of Rs 38,827.28 crore in FY13 boosted by 18.6%
 growth in Interest Income and 6.1% growth in Other (Non-Interest)
 Income. Despite limited deployment opportunities, your Bank''s Net
 Interest Income (NII) increased by 9.7% (y-o-y) to Rs 11,315.26 crore.
 
 Your Bank managed to grow its credit portfolio by 14.2% with a balanced
 mix of loans to large & mid corporates, MSME, retail and agriculture
 sectors. As in the past, your Bank''s Asset Quality ratios were the
 lowest in the large-sized PSU banking segment with Gross NPA at 2.40%
 and Net NPA at 1.28%.
 
 Your Bank''s Operating Profit (Gross Profit) remained in positive
 growth zone despite a significant industrial slowdown during FY13. It
 grew by 4.9% (y-o-y) in the year FY13 to Rs 8,999.15 crore. The Net
 Profit for FY13 was lower at Rs 4,480.72 crore versus Rs 5,006.96 crore
 in FY12 on the back of higher provisions against the NPAs.
 
 Your Bank continued with its prudent approach of maintaining higher
 provision coverage ratio. Its Loan Loss Coverage Ratio was at a
 relatively higher level of 68.24% as on 31st March, 2013, compared to
 its peers from the PSU banking segment.
 
 As in the past, your Bank''s Overseas Operations continued to remain
 the mainstay of its business. During FY13, they contributed 29.4% to
 the Bank''s Total Business, 24.6% to its Operating Profit and 34.2% to
 its Core Fee income.
 
 Your Bank''s capital strength added to its overall soundness.  Its
 CRAR (BASEL-II) stood at 13.30% and Tier-I capital at 10.13% as on 31st
 March 2013. Your Bank is well capitalized not only for achieving its
 growth aspirations but also for achieving capital requirements for
 BASEL-III compliance.
 
 Strategic Initiatives during FY13 Overseas Business
 
 Since its foray into international arena in the year 1953, your Bank
 has been consistently expanding the network to tap the business
 opportunities overseas. This year the Bank''s 100th overseas office at
 DIFC, Dubai was inaugurated by the Hon''ble Union Finance Minister,
 Government of India to commemorate this historic moment. As on 31st
 Mar, 2013, the Bank had operations in 24 countries with 100 offices.
 These 100 offices comprised of 60 branches of the Bank, 39 branches of
 its overseas subsidiaries and one representative office. Your Bank''s
 wide international presence provides it with significant
 risk-diversification benefits across the globe. During FY13, your Bank
 opened 12 new branches/ offices (including those of the subsidiaries).
 These were opened at Sydney, Australia; DIFC, Dubai, Sohar, Oman; Rose
 Belle, Mauritius and Electronic Banking Service Unit (EBSU) at DMCC,
 Dubai. In addition, the Joint Venture Bank in Malaysia - ''India
 International Bank (Malaysia) Bhd. also commenced operations during the
 year under review.
 
 Asset Quality
 
 As stated earlier, India entered FY13 faced with a depressed
 macro-economic environment, which gave rise to the problem of rising
 delinquencies and loan defaults. To address these concerns, your Bank
 further stepped up its credit monitoring process by taking several
 initiatives in identifying the incipient sickness/potential default/
 weaknesses in the advance accounts for taking corrective actions
 including restructuring in deserving cases, for prevention of slippages
 and maintaining good asset quality.  The Monthly Monitoring Report
 (MMR) format in respect of advance accounts with fund plus non-fund
 based exposure of Rs 10 crore and above was introduced during the
 course of the year. This enabled speedy and effective monitoring of
 advances and ensured timely action in respect of stressed accounts.
 Besides, your Bank also initiated follow up actions for ensuring
 expeditious review of accounts, compliance of terms and conditions,
 up-gradation in credit rating etc. in high value advance accounts for
 improving the asset quality of the credit portfolio.
 
 To address the asset quality concerns due to a fragile economic
 environment, your Bank continued its practice of rigorous monitoring
 and recovery of the NPA portfolio. It made all out efforts to maintain
 the asset quality by laying down a comprehensive structure of recovery
 and credit monitoring function at the branch, region, zone and
 corporate office levels. Besides this, the Nodal officers at each DRT
 (Debt Recovery Tribunal) centre were assigned the role of a follow-up
 of legal cases on day to day basis so as to minimize the delay in
 obtaining decrees and execution thereof in order to expedite and
 maximize recoveries. For Recoveries of all DRT Suit filed NPA accounts,
 the assets charged to the banks are now being sold through E-auction to
 get a fair market value of assets charged to the Bank.  Your Bank
 continued its emphasis on follow-up mechanism to explore recovery
 prospects of NPA accounts. The system of monitoring the large value NPA
 accounts of say Rs 25 lakh and above, directly from the corporate
 office has ensured proactive action by branches, advocates, recovery
 agents, etc.
 
 During FY13, your Bank laid specific focus on recovery of small
 accounts by organizing Lok Adalats and Recovery Camps at village/town
 level. Your Bank also launched an incentive linked recovery scheme
 called Sankalp - V, to enlist personalized attention of each and
 every staff member in pursuing recovery efforts of small value accounts
 with an outstanding up to Rs 15 lakh. The cash recovery made during the
 year FY13 under the scheme was satisfactory at over Rs 231 crore.
 
 Customer Service
 
 In order to improve the customer service, your Bank introduced an
 online complaints icon on the Bank''s website, wherein the
 complainants can lodge their grievances in a simple and easy manner
 through multiple channels. Furthermore, your Bank installed a KIOSK --
 a dedicated computer system at all Zonal Offices along with the
 Bank''s Head Office, to enable the customers to lodge their
 grievances/complaints on-line.
 
 Corporate Credit
 
 With the purpose to accelerate credit to mid-corporate borrowers and to
 increase the business in this domain through specialised branches, your
 Bank set up a new business vertical, i.e., Mid Corporate Segment. In
 order to have a focused business approach for catering to the valued
 Mid- Corp borrowers, your Bank opened 16 Mid-Corporate branches (in the
 first phase) across the country. The focus has been on harnessing Large
 Corporate business through CFS (Corporate Financial Service) branches
 and Mid Corporate business through Mid Corporate Branches, thereby
 maximizing overall earnings from on and off balance sheet business.
 
 In line with the announcement by the Finance Minister in his Budget
 speech for FY12, your Bank, co-promoted the country''s First
 Infrastructure Debt Fund - M/s India Infradebt Limited to facilitate
 the flow of long term debt fund to Infrastructure sector.
 
 Retail Business
 
 In order to offer attractive returns to the depositors and also to
 improve the ALM (asset-liability) profiles, your Bank introduced Term
 Deposit Product styled as Baroda Double Dhamaka on 25th February
 2013 offering an interest rate of 9.34% for a period of seven years,
 six months and five days.
 
 Your Bank strengthened its retail portfolio by effecting major changes
 in its Home Loan product by increasing the maximum age from 65 years to
 70 years and by easing the eligibility criterion to suit the customer
 requirements. Also, the maximum period of loan repayment was increased
 to 30 years from 25 years, thus helping borrowers to lengthen their
 repayment schedule. It was also decided to offer an insurance cover
 under the Master Group Personal Accidental Policy for home loan
 borrowers.
 
 MSME Business
 
 To give a boost to the MSME business, your Bank opened five new SME
 Loan Factories at Indraprastha (New Delhi), Anand, Bhopal, Junagarh,
 and Jalandhar - taking the total of SME loan factories to 52 across
 India. The ''loan-factory'' model is a pioneering concept introduced
 by your Bank to ensure better quality of credit appraisal, reduced
 turn-around time and improved volumes - thereby enabling your Bank to
 increase its MSME lending without sacrificing the quality of credit.
 
 Moreover, your Bank actively participated in various exhibitions and
 seminars during FY13 to build brand image of the Bank in MSME
 financing. Additionally, it organized an Awareness Programme in order
 to achieve total customer relationship through enhanced cross selling,
 locational meetings, and involvement of trade bodies at the national
 and state levels. To update the knowledge and skills of the processing
 and marketing officers attached to the SME factories, your Bank
 organized external training plus special courses at Training Centers
 and its own Staff College. The Bank introduced an online loan
 application for MSME borrowers and renewed a number of area specific
 schemes pertaining to a variety of industries across India during FY13.
 It also celebrated the MSME Festival during Jan-Mar 2013 to encourage
 staff at the SME Loan Factories and branches to re-double efforts at
 canvassing new business.
 
 Priority Sector
 
 Your Bank introduced various strategies during FY13 to tap the emerging
 opportunities in rural and agriculture banking, the major ones being
 described below.
 
 In order to augment agriculture advances, your Bank conducted Special
 Campaigns viz. Kharif and Rabi campaigns for crop loans under which the
 disbursements of Rs 5,284 crore and Rs 2,262 crore, respectively, were
 made. Another campaign for Investment Credit was also launched under
 which disbursements of Rs 1,096 crore were made. The Bank also
 organized 4,245 Village Level Credit Camps and disbursed Rs 2,922.48
 crore to 2,06,375 borrowers during FY13. It identified 450 Thrust
 Branches across India to enhance agriculture lending which contributed
 36.0% of total Agriculture outstanding as at end-March 2013.
 
 Additionally, it formulated various Area-specific Schemes tailor-made
 to the local requirements, particularly where there is a concentration
 of activities like cold storages, poultry units, fishery etc. Suitable
 concessions in the rates of interest, charges, etc. were allowed under
 these schemes to garner maximum possible business.
 
 Your Bank also introduced an automated loan processing system for
 improving the efficiency of branches in processing of loan proposals
 under agriculture thereby facilitating timely availability of credit to
 farmers in adequate quantity.
 
 Financial Inclusion
 
 Your Bank has been actively participating in the Direct Benefit
 Transfer (DBT) scheme of the government and particularly shouldering
 this responsibility in its 45 lead districts. It made operational the
 Aadhaar Payment Bridge System (APBS) wherein the benefits are
 transferred directly into beneficiaries'' accounts based on the
 Aadhaar number.  This means the government agencies need not maintain
 bank details and account number of beneficiaries. To further smoothen
 the transactions by using the Aadhaar Enabled Payment System (AEPS)
 that allows online inter-operable financial transactions by PoS (Micro
 ATM) through the Business Correspondent of any bank using the Aadhaar
 authentication, your Bank has made it operational by mid- May 2013.
 
 Your Bank continued with full vigour its drive towards Financial
 Inclusion. It opened 170 branches in rural operations of which 101 were
 opened in unbanked rural centres during FY13. It established 2,695
 Ultra Small Branches across the country during the year under
 consideration. For MGNREGA transactions, your Bank set up a Pilot
 Project for Sanganer Block in the state of Rajasthan during the year
 and processed 9,593 transactions amounting Rs 86,54,676/-.
 
 Under APBS, your Bank linked 1, 31,735 Adhaar Cards and provided credit
 to 6,635 beneficiaries amounting to Rs 49, 01,659/-.
 
 Information Technology Structure
 
 With the purpose to encourage alternate delivery channels, your Bank
 completely revamped its Internet Banking, viz., Baroda Connect (Retail
 portal) by enhancing its look & feel and promoting the user
 friendliness. Moreover, your Bank continued to add more facilities
 under its Internet Banking channels. Other enhanced features such as
 Tax payments of various States, Integration of GRIPS (Government
 Revenue Receipts for West Bengal), Credit to Loan accounts, Bill
 payments, Online donations to Prime Minister Relief Fund, India Life
 Insurance premium payment through e-banking, IMPS(Immediate Payment
 services) through e-banking were added during the year. Your Bank''s
 Internet banking facility was made available on all Smart-phones/
 tablets offering comfort of anywhere banking to its customers. Internet
 Banking was also extended to 13 overseas territories viz. Tanzania,
 Uganda, Kenya, Mauritius, Seychelles, Botswana, New Zealand, UAE, Fiji
 and by adding transaction-based internet banking in UK, Oman and Ghana
 and view-based internet banking in Australia during FY13. A view-based
 e-banking was also provided in all the RRBs sponsored by your Bank. In
 order to enhance security and confidence in the Internet Banking, your
 Bank introduced enhanced security features by deploying Fraud
 Management Solution, including two factor authentications in India and
 five Overseas territories viz. UAE, UK, New Zealand, Kenya and Uganda
 by enabling ARCOT OTP, PULL OTP and SMS OTP.
 
 To encourage Bank customers to use Mobile Banking, your Bank added many
 more features viz., IMPS i.e. Immediate Payment Services Person to
 Account (P2A) fund transfer, enabling mobile banking application in all
 i-Phones and i-Pads in addition to Blackberry, Android, Windows,
 enabling of NUUP(National Unified USSD Platform) etc. Also, your Bank
 is in the process of implementing P2M (person to Merchant) fund
 transfer under IMPS and has acquired India First Life Insurance as the
 first merchant.  Your Bank proposes to enable Mobile Banking
 application for Windows8, Implementation of Mobile banking in Uganda
 and UAE etc. Your Bank has also initiated implementation of Mobile
 banking in its sponsored RRBs.
 
 Your Bank''s ATM Switch was upgraded to a higher version along with a
 hardware up-gradation with many enhanced features for better
 performance, speedy ATM transactions and ease of ATM expansion during
 the year. The ATM switch was upgraded for India, UAE, Oman, Mauritius,
 Fiji, Tanzania, Botswana, T&T and New Zealand. Many customer-centric
 initiatives such as implementation of Rupay ATM Cards, Rupay POS and
 Rupay KCC Cards, Brown label ATMs, Collection of Insurance premium for
 IndiaFirst Life Insurance Policy holders through ATMs, ATM Transaction
 receipt printing in Hindi, Regional Language Screen selection for
 Gujarati, Marathi and Tamil, Talking ATMs for visually impaired
 persons, implementation of Fraud Management Solution in ATMs/ POS in
 India were added during the year. Your Bank could successfully launch
 the Rupay ATM and Rupay KCC cards for its RRBs also.
 
 To enhance the security features, your Bank implemented Fraud
 Management Solution for Internet Banking, ATM & POS. Also, your Bank
 enabled the SMS Alerts delivery facility to its customers for all
 transactions made through alternate delivery channels and for all CBS
 transactions worth Rs 5000 and more. Moreover, your Bank is regularly
 conducting VAPT (Vulnerability Assessment & Penetration Testing) of
 external facing applications, e-banking log monitoring, etc. Even for
 the branches, your Bank heightened the security systems by enabling a
 Fraud Risk Management System for day-to-day monitoring of suspicious
 transactions at branches.
 
 H.  R. initiatives
 
 Your Bank has adopted a very balanced people strategy to create a
 composite and responsible Human Resource culture in the Bank that can
 drive growth and also adequately face various challenges of the current
 times, viz. the large retirements, massive induction of talent, huge
 training requirements and challenges of succession and productivity.
 
 A comprehensive HR strategy and Framework has been drawn up to take
 care of all these challenges in an integrated manner through a focused
 HR transformation project called Project SPARSH which is unique and
 path-breaking in the entire industry.
 
 Your Bank has taken a major step to develop the next line of leaders
 for the future by putting in place a Talent Management System which
 proactively identifies future potential leaders to cater to the
 leadership gaps likely to arise in the next five years.
 
 Your Bank has developed a scientific manpower planning model to
 estimate manpower needs by level, skills and by branch. It has also
 done a strategic workforce planning for the next few years to feed into
 various other HR functions like recruitment planning, career
 progression vacancies and postings/deployment, etc.
 
 In order to make the large number of fresh recruits productive in the
 quickest possible time, your Bank has initiated a very structured
 on-boarding programme consisting of both functional and cultural
 components which would enable the persons to be work-ready quickly and
 also help in their cultural assimilation within the Bank.
 
 Another major initiative is the Baroda Manipal School of Banking
 jointly taken by your Bank and Manipal Global education to train
 students for a banking career within your Bank on a first-day,
 first-hour productivity model. The students undergo a focused
 one-year programme which is tailored to the Bank''s requirements and
 leads to the award of a post-graduate diploma in Banking and Finance,
 before they are absorbed in the Bank as Probationary officers.
 
 Risk Management
 
 To ensure sustainable and consistent growth, your Bank has developed a
 sound risk management framework so that the risks assumed by the Bank
 are properly assessed and monitored on a continuous basis. Your
 Bank''s Board has put in place a robust Enterprise-wide Risk
 Management architecture so that the risks remain within the risk
 appetite defined by the Board.
 
 While your Bank has made a successful migration to Basel
 
 II framework, with the preponderance of common equity in the tier I
 capital as well as total capital of the Bank, your Bank does not
 envisage any difficulty in implementing Basel III capital rules.
 
 Key Achievements in FY13
 
 In spite of the challenging business environment, your Bank ended the
 year under review with a satisfactory set of results.
 
 - Your Bank''s Global Business expanded by 19.3% (y-o-y) to Rs
 8,02,069 crore by end-March, 2013. Within this, the Domestic Business
 expanded by 17.4% to Rs 5,66,000 crore and the Overseas Business
 increased by 24.2% to Rs 2,36,069 crore.
 
 - The Global Deposits of your Bank registered a growth of 23.1%
 (y-o-y) to Rs 4,73,883 crore by end-March 2013. The Domestic Deposits
 expanded by 22.0% to Rs 3,41,706 crore, while the Overseas Deposits
 rose by 26.2% to Rs 1,32,178 crore.
 
 - Amidst aforementioned challenges, your Bank''s CASA deposits
 increased by 15.9% (y-o-y) to Rs 1,19,981 crore.
 
 - The share of Domestic CASA as on 31st March 2013 stood at 30.38%.
 
 - Your Bank''s Global Advances increased by 14.2% (y-o-y) to Rs
 3,28,186 crore by end-March 2013. While Domestic Advances rose by 11.0%
 to Rs 2,24,294 crore, Overseas Advances surged by 21.8% to Rs 1,03,891
 crore.
 
 - The Retail Credit of your Bank increased by 6.7% (y-o-y) to Rs
 38,046 crore during FY13, of which, Home Loans increased by 13.5% to Rs
 16,045 crore.
 
 - Your Bank''s SME Credit portfolio expanded by 30.3% (y-o-y) to Rs
 44,974 crore by end-March 2013. While its Farm Credit remained flat at
 Rs 28,739 crore (primarily due to a change in regulatory definitions),
 its Credit to Weaker Sections increased by 7.5% to Rs 17,045 crore.
 
 - Your Bank''s Operating Profit stood at Rs 8,999.15 crore and Net
 Profit at Rs 4,480.72 crore in FY13.
 
 - The Return on Average Assets (ROAA) stood at 0.90% in line with
 your Bank''s guidance.
 
 - Despite capital infusion, the Return on Equity (ROE) was at 14.59%
 as at 31st Mar, 2013.
 
 - Your Bank managed to protect its NIM at 3.11% in Domestic
 Operations and at 2.66% in Global Operations during FY13.
 
 - Given your Bank''s prudent approach, its Provision Coverage Ratio
 was at 68.24% as on 31st March 2013 - relatively higher in a PSU
 banking segment.
 
 - Your Bank''s Capital Strength gets reflected in its CRAR (Basel
 II) at 13.30% and Tier I capital at 10.13% as on 31st March 2013.
 
 - Your Bank''s Cost-Income Ratio continued to be at a relatively
 lower level of 39.79% for FY13.
 
 - While its Earnings per Share stood at Rs 108.84, its Book Value per
 Share stood at Rs 729.69.
 
 Awards & Accolades
 
 During FY13, your Bank received several awards for its excellent
 performance across various business and financial parameters.
 
 These awards included- Bloomberg UTV Financial Leadership Award -Best
 PSU Banking; Dun & Bradstreet
 
 - Polaris Financial Technology Banking Awards; Best Public Sector Bank
 under the category Global Business Development-Overall Best Public
 Sector Bank; Banking Technology Award-2011 by IBA; Use of Technology in
 Training & e-learning - Winner; Best Customer Relationship initiatives
 - 1st Runner up; Best use of Business Intelligence
 
 - 1st Runner up; Best use of mobility tech in Banking - 2nd Runner up;
 Best Risk management & Security initiatives
 
 - 2nd Runner up; Business India Best Bank Award 2012; Forbes India
 Leadership Award - Best CEO Public Sector;
 
 CNBC TV18 - ''India Best Banks and Financial Institutions Award
 2012'' - Best Public Sector Bank; Best Large Bank 2012 - Business
 World November 26th 2012 Issue; Best Large Bank 2012 - Business Today -
 KPMG - December 2012; Best Public Sector Bank Award by State Forum of
 Bankers Club, Kerala, December 2012, at Ernakulam; Business Standard
 Banker of the Year (2011-12); FE Best Banks Award 2011-12 for ''Best
 PSU Bank'' awarded by Financial Express Group; The Most Efficient
 Public Sector Bank by Dalal Street Investment Journal on 23/03/2013;
 National Award for 2011-12, conferred for excellence in the field of
 Khadi & village Industries by Khadi & Village Industries Commission on
 3rd April,2013; Strategic Communication and Leadership Award by
 Asian Confederation of Business and World CSR Congress at Corporate
 Affairs Award Ceremony.
 
 While these awards and titles mean recognition for your Bank''s
 superior performance, they also bring more responsibility to it. The
 Team Baroda is aware that all stakeholders expect much more from your
 Bank now.
 
 Team Baroda has to live up to these expectations and let me add that we
 find this an exciting challenge to meet.
 
 Looking Forward
 
 Following a sharp slowdown in FY13, there are expectations of a modest
 recovery in FY14, with some pick-up likely in the second half of the
 year. There are expectations of a normal monsoon in FY14 which would
 positively support not just the agricultural growth but also the growth
 of industry.  The factors like downward movement in commodity prices,
 easing financial conditions, the recent corrective steps taken by the
 government to reduce the bottlenecks in investment and a likely modest
 pick-up in exports suggest a relatively better economic scenario in
 FY14 as compared to that in FY13.
 
 Notwithstanding the uncertainties in economic environment, your Bank
 will continue to grow its business sustainably even in FY14. To achieve
 this, you Bank would focus on people, processes and technology
 following a strict code of business conduct and ethics.
 
 Your Bank is in a position of strength, driven by a strong balance
 sheet, good deposit franchise, rich capital adequacy, a consistent
 leadership and prudent risk management systems.
 
 Bank''s Corporate Goals and Strategy
 
 For the year FY14, the motto of your Bank is designed in such a manner
 that it refocuses the Bank towards addressing the current concerns and
 ensures a strong path forward.
 
 BACK To BASICS is the motto of your Bank for FY14.
 
 BASICS is defined in such a manner that each letter represents
 the critical banking function.
 
 B for - Business growth (to increase the market share)
 
 A for - Asset Quality (to be kept at the highest)
 
 S for - Solvency & Liquidity (to be maintained through proper ALM)
 
 I for - Innovation (to be the key differentiator)
 
 C for - Customer Centricity (to be the key driver)
 
 S for - Systems & Procedure (to be continuously updated to support
 above pillars)
 
 To further sharpen the focus, your Bank has recently created two new
 business verticals, notably the Deposit Resources, Wealth Management
 & Marketing and the Government Business.
 
 During FY14, your Bank plans to enhance its self-service channels
 substantially with the objective of providing world class hassle free
 services to its customers. It proposes to add 3,500 additional ATMs and
 cash dispensers plus self- service passbook printing kiosks in
 1,500 branches and also 25,000 POS (Point of Sale) machines.
 
 It plans to deploy 100 bunch note acceptors, 50 self-service 24x7
 e-lobbies equipped with cash dispensers, cash acceptors, cheque deposit
 machines, internet banking kiosks, self-service passbook printing
 kiosks, and hotline to the Bank''s contact centers. Your Bank also
 proposes to develop single note acceptors for cash acceptance in
 smaller centers.
 
 Your Bank plans to focus on mobilizing low cost CASA deposits and
 balancing the credit portfolio more in favour of retail, SME and
 agriculture. Your Bank also proposes to focus on non-interest income
 and prudent control over expenses. Furthermore, the Bank would pursue
 prudent management of bad debts by containing slippages.
 
 Your Bank''s relatively steady performance in FY13 strongly
 demonstrates its intrinsic value, its resilience, its robust systems,
 processes and people and its sustainability, customer confidence and
 competitive strength. Your Bank continued to grow without losing a grip
 over asset quality even though the nation witnessed negative growth
 drivers for much of the financial year FY13.
 
 I am confident and optimistic about the Bank''s prospects as we
 continue to ride out the phase of economic slowdown and emerge stronger
 and more responsive to the nation''s needs.
 
 In this journey of your Bank, I solicit your continued cooperation and
 patronage.
 
 
 
                                                        S.  S. Mundra
 
                                         Chairman & Managing Director
Source : Dion Global Solutions Limited
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